Microsoft Corporation (MSFT)’s Patent Negotiations Regarding Motorola Mobility With Google (GOOGL) Fuel A court fight

Microsoft Corporation (NASDAQ:MSFT) is locked in a fight with Google Inc (NASDAQ:GOOGL) over what the former believes are bad patent licensing practices. The patent in question is held by Motorola Mobility and describes a technology used in Microsoft’s game consoles. Google acquired Motorola Mobility and effectively inherited the patent dispute with Microsoft.

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In the patent matter, Microsoft Corporation (NASDAQ:MSFT) holds that Motorola Mobility violated certain patent licensing principles, especially those regarding video compression and Wi-Fi connectivity. A federal jury supported Microsoft’s position, but the fight rages.

Fundamental technology debacle

The patent dispute between technology giants Microsoft Corporation (NASDAQ:MSFT) and Google has ignited debate about licensing of technologies that have fundamental application across industries. While licensees are seeking for fair charges, patent holders also push for fair value of their technology, producing a clash of interest.

2.25% royalty on Xbox price

The patent dispute between Microsoft Corporation (NASDAQ:MSFT) and Motorola Mobility began when the latter still operated as a standalone entity, that was back 2010. At that time, Motorola Mobility asked Microsoft to pay royalties on Xbox consoles that is equal to 2.25% of the retail price of the device.

Microsoft didn’t find the request interesting, instead claiming that Motorola Mobility was seeking to harvest nearly $4 billion from it a year. However, Motorola Mobility explained its case saying that its request to Microsoft was only meant to open room for talks on the patent issue.

Google inherits problems

Google has been drawn into the patent dispute that had little to do with it in the first place because it acquired Motorola Mobility. The company retains the patents of Motorola Mobility although it has since sold off the hardware business of Motorola Mobility for nearly $2.9 billion to Lenovo.

Patent dispute is almost like second nature for technology companies. Even Microsoft that is claiming unfair treatment by Motorola Mobility also fetches royalties from Android phone makers, although Google developed the software.

About the Author

Michael joined US Markets Daily in 2009 and is a national news reporter focusing on economic issues, data analysis and the financial health of state and local governments.

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